To start a successful trading activity, each trader needs to know and understand the terminology that is used in a professional environment to denote the various realities of activities in the financial market. Esperio pays special attention to training traders before trading. This terminological dictionary can serve as basic training material for beginners. The list of terms in the dictionary is not exhaustive.
All evens option -
This phrase is used in options trading and denotes the period and at the same time the state during the transaction when the actual price of the underlying asset is equivalent to the value of the asset at the time the option was purchased. An option that is non-profitable and non-loss means that in the event of an instant closing of a transaction, the trader will not incur losses on it, but will not receive profit either.
Analyst Concensus -
is a unanimity in analysts' assessments regarding the prospects of any asset, market trend forecasts, interpretation of fundamental data (not to be confused with Consensus Patrum).
is the price that a broker offers a trader to buy a certain financial instrument. In a broad sense, this is the price for which the seller is ready to part with his goods. In the currency quote, this price is indicated on the right. The offer price is always higher than the ask price.
a situation where shares of one issuer are consistently bought / sold as their price goes down or up. At the same time, the average price at which shares were bought or sold is kept.
Average price -
simple arithmetic average of the closing prices for a certain period of time or for certain periods of duration within a day.
Averaging down -
an investment strategy in which the shareholder purchases additional shares of a previously initiated investment after the price has fallen. The result of this second purchase is a decrease in the average price at which the investor purchased the shares.
Balance of Payments -
it is data showing all economic transactions of the state with other countries for the specified period. The balance of payments report contains complete information about the funds received by the state from other countries, as well as about the funds spent by the state abroad. The current balance of payments reflects operations on the balance of services, the balance of income from investments and wages, the balance of transfers, and others.
Balance of Trade -
a significant coefficient that characterizes the country's foreign trade relations. The components of the trade balance are exports and imports of goods. The difference between the sums of these components shows the competitiveness of the state in the field of trade. If exports prevail over imports, then this indicates the strengthening of the national currency, and also positively characterizes the country's economy. If the cost of goods for import is higher than the cost of export, this indicates a low competitiveness of the country. If the indicators match, a net balance is formed.
It is a market participant who has sold a security or has entered a short position or is about to shorten it, hoping for a decline in prices. He makes a profit when the market value of shares decreases.
Bear Market -
the situation in the financial market, which has a pronounced tendency to the sale of assets or the predominance of "bearish" sentiment among the majority of traders.
is the price at which a trader can sell a financial instrument. In currency quotes, the ask price is written on the left, it will always be lower than the offer price. At the Bid price, market orders are executed, positions, pending orders, as well as Stop Loss and Take Profit orders are closed.
Block house -
is a company that provides intermediary services to find sellers or buyers of large blocks of shares. The package broker does not participate directly in the transaction (that is, it is not one of its parties), providing only the preparation of all necessary operations.
Bulldog Market -
external financial market in Great Britain (United Kingdom). Such an allusion appeared due to the wide popularity of the breed of dogs bred in England. Similar terms are actively used in relation to the American (“Yankee market”) and Japanese (“Samurai market”) markets.
this term refers to the acquisition of financial assets, going long (buying a commodity in the expectation that the price of it will rise) and closing a short position (buying a commodity at a price lower than that at which it was sold, with the expectation of making a profit).
Buy on close -
is the purchase of an asset at the price of the last quote. In the expanded sense, buying at the close is the acquisition of a financial asset during trading at a price that is not much different from the closing price of the session. The closing price is understood as the market value of the asset, which is determined at the end of the exchange day.
Buying power -
is a certain amount that an investor has to buy securities, taking into account the margin. In other words, purchasing power is the investor's money in brokers' accounts and the additional funds that can be raised. Market development is limited by existing purchasing power. In a broader sense, purchasing power is an economic indicator that characterizes the amount of goods and services that can be purchased with a national currency.
Call/Put option -
is a type of binary option offered by brokers for trading. By investing in an Call/Put option, the trader makes a forecast of the market position by the time the contract expires. To make a profit, he needs to correctly indicate whether the price of the asset will fall or rise over the selected time in relation to its value at the time of buying the option.
is the currency of a state in a certain physical representation. Cash is money (coins or banknotes) that is in free circulation in the hands of the population and is used in the sphere of circulation of goods and services. The issue of cash is mainly carried out by central banks or the treasury. In those countries where a market economy is developed, the share of cash payments is from 3 to 8% of the total payment turnover.
Cash and Carry -
is the sale of a futures at the same time as the purchase of a security, when the balance is secured by concluding a repo transaction or obtaining a loan.
CBOE (Chicago Board Options Exchange) -
Located in Chicago, the CBOE (Chicago Board Options Exchange), the main purpose of which at the time of its creation in the 1970s was trading in standard options.
an investment analyst who uses diagrams and graphs in his analysis to reflect past fluctuations in the price of shares, the ratio of the market price of a share to net profit per share, turnover etc. of individual companies in order to predict the movement of the stock prices of these companies in the future. By arguing that history repeats itself and that the movement of stock prices follows a small number of repeating patterns, chartists have gained widespread acceptance in the past, especially in the US. It has now become common practice for analysts to use a wider range of methods than those used by the Chartists.
Clearing House -
A separate division of the exchange, which deals with the settlement of customer transactions. For example, a clearing house registers all transactions of clients and performs clearing. Also, the duties of this unit include making payments based on the results of clearing.
CME (Chicago Mercantile Exchange) -
a Chicago-based non-profit corporation that provides opportunities and space for futures and options meeters, enforces trading rules, collects and disseminates market information, and operates the clearing mechanism.
Common Shares -
allow its owner to receive dividends if the corresponding decision was made by the Meeting of Shareholders. Despite the fact that dividends are usually paid from the part of the profit that remains after the payment to holders of preferred shares, the latter in Russia are often cheaper than common shares.
Complete Transaction -
means two reverse transactions on the trading platform (buy with a further sale / sell with a further purchase) using equal amount of funds. In other words, a complete complete transaction is opening and closing of a transaction.
is a document that records all the details of a just concluded transaction on the securities market, such as the settlement date, terms of the agreement, commission, and others. Confirmation is also understood as a written document that confirms the trader's order sent by phone. As a rule, these are written notifications by brokers to traders that a transaction has been executed.
a situation in trading when the price of the underlying asset moves towards the price of a futures contract. And vice versa.
this term is used when talking about acquiring a contract or stock to offset a short trade previously entered into. Suppose a trader purchased a futures contract for gold, after which a Call option was sold for an equal amount of the commodity with the same delivery date. In this case, the trader's option position will be considered covered.
Cross pairs -
These are currency pairs that do not contain USD.
in financial markets, delivery is broadly defined as the transfer of a financial asset or commodity from a seller to a buyer in the event of a forward transaction being completed. In a narrow concept, delivery is a Forex transaction in which all parties agree to accept and ensure the delivery of currencies on agreed terms.
is a negative change in the rating of a security. This situation occurs when analysts believe that the outlook has deteriorated from the original recommendation, usually due to significant and fundamental changes in the company's current operations and outlook, as well as in the industry as a whole.
is the most important and most closely studied measure of a company's financial statements. It shows a company's actual profitability compared to analyst estimates, its own historical performance, and industry competitors' earnings. Profit is the main factor that determines the share price of a public company. This is a positive financial result of a trading or speculative operation, investment of funds, exceeding the amount of the initial investment.
Earnings Per Share, EPS -
Earnings per share (EPS) is calculated as a company's earnings divided by the number of shares of common stock outstanding. The resulting number serves as an indicator of the company's profitability. The higher the earnings per share of a company, the more profitable it is.
a foreign exchange index, established in 1979 and including up to ten currencies of European countries. The ECU (European Currency Unit) was used as a monetary unit by the countries that are members of the EEC. It was the forerunner of the euro. Settlements in ecu were made until 1999 and only in non-cash form.
Elder Rays -
are one of the most common indicators of technical analysis, which allows you to determine which trend, bullish or bearish, is stronger at the current time, and also helps to find entry and exit points in the market. Elder Rays combine tools such as oscillators (Bulls Power and Bears Power), which allow you to find moments for making transactions, and an exponential moving average (EMA), which shows the direction of the trend. This indicator can be used both independently and in combination with other technical analysis tools.
the amount of funds on the account at the current moment. Funds include both profits and losses on positions held at the time this indicator is calculated. The following formula is used to determine: Funds = Balance + Credit + Floating Profit - Floating Loss.
Equity Market -
system of economic relations between buyers and sellers of shares. Shares are traded on the stock exchange or by means of other methods.
False breakout patterns -
a short-term price move, in which it, having broken through a local maximum or minimum, quickly returns back. A false breakout of a level can be seen as a “cheat” on the part of the market because it looks like the price will break out, but then it will quickly reverse, fooling everyone who falls for the “bait” of the breakout. One of the most important price action trading patterns to learn.
Federal Open Market Commettee, FOMC -
The Federal Open Market Committee, whose functions include the development of US monetary policy and the determination of the lending interest rate for the sale of federal funds.
Federal Reserve Board -
is a board that runs the federal banking system. The functions of the board include the development and implementation of monetary policy, supervision of the Federal Reserve Banks. Monetary policy is carried out by buying or selling securities and by raising or lowering the discount rate, the rate at which banks borrow from the Federal Reserve.
Flat (sideways price movement) -
price fluctuation within certain limits, without an acute trend.
Floating Profit or Loss -
this is the trader's profit or loss during an open transaction, not yet fixed definitively. Thanks to floating profits and losses, a trader can monitor the state of an open position, determining when it is better to close a transaction. When closing a position, profit or loss indicators are fixed, reflecting on the state of the trader's deposit.
Floating stock -
is a publicly traded number of a company's shares out of the total number of its shares. The total number of shares is usually larger. Privately held shares are held by insiders, major shareholders and employees. Prohibited shares refer to insider shares that cannot be traded due to a temporary restriction, such as during the lock-up period following an initial public offering (IPO).
is a conclusion about the upcoming development and price movement, based on a special study. Often the forecast contains the exact values of the predicted parameters.
Foreign Exchange -
the largest and most liquid global financial market in the world. National currencies are the goods in this market. The prices for currencies are determined only by the level of supply and demand and are formed on the basis of an agreement between the participants of the trade.
Forex Market Technical Analysis Indicators -
Usually these are used to predict price changes in the foreign exchange market. These are calculations that take into account the volume of a particular financial instrument on the market and its price. Focusing on Forex Indicator, traders can make decisions about entering the market or exiting it. The MetaTrader 4 trading terminal has a function that allows you to add Forex indicators directly to trading charts or build them in a special window. Forex psychological indicators help to identify the mood of market participants and, on the basis of this, try to determine possible price fluctuations. Oscillators are used to determine the strength of a trend or when a trend is changing.
an agreement in which one currency is exchanged for another at a predetermined time at a predetermined price. The price is usually indicated at the time of the conclusion of the contract and corresponds to the current value of the asset, while the term may not be set at all. This is an open date forward. An asset (or subject) under an agreement can be not only currency, but also bonds, commodities, shares, etc. If the contract provides for the delivery of an asset and its payment in full, then the forward is called a delivery forward (DF). If only settlement is specified, then such forward will be called settlement or non-deliverable (NDF).
is a technical analysis chart commonly used by traders to determine the most appropriate entry or exit point in a market. For more accurate decisions, the fractal is most often used in combination with various indicators and other technical analysis methods, since it is considered a lagging indicator. It is a combination of five candles, the middle of which shows either the maximum or minimum price on a given segment.
Free Margin -
available funds on the trading account that were not used as collateral in transactions on the financial market. They can be used to conduct any operations, including the withdrawal or opening new transactions. Calculation formula: Free Margin = Equity - Margin.
FRS (Federal Reserve System, the Fed) -
an organization in the United States that includes 12 Federal Reserve Banks. It is similar to the Central Bank. The Fed is governed by the Washington-based Board of Governors. It has the authority to control the activities of financial holdings, banks that are members of the Fed, foreign banks operating in the United States, as well as international transactions performed by all banks in the country. Regulates the country's monetary policy.
Fundamental analysis -
a method for forecasting price fluctuations based on an analysis of current political and economic events. A set of analytical research methods used to assess the state and prospects of the securities market, industries, commodity, financial markets and the economy as a whole. To explain the processes, events and obtain the necessary forecast data, the study and study of the dynamics of macro and microeconomic indicators, their comparison with each other, as well as financial analysis are carried out. A popular way among traders to predict the behavior of the price of an asset in the foreign exchange market. Fundamental analysis is based on the analysis of indicators of the world's leading economies and statistical data on the development of certain sectors of the economy, produced by the largest countries. Also, fundamental analysis takes into account important political and financial news that may affect quotes. Based on the nature of the analyzed information, conclusions are drawn about which direction the asset price will move in the financial market.
Fundamental Analyst -
a specialist in the study and application of fundamental analysis.
a financial contract that gives its owner the right to receive a certain amount of some commodity in the future. This commodity can be real things such as oil, gold, coffee, etc. or financial instruments - shares, blocks of shares and other securities. The duration of such a contract is predetermined.
Futures contract -
an obligation to purchase or sell goods after a certain period of time at a price fixed at its conclusion.
Futures Market -
a market where the subject of trading are derivatives of financial instruments from the underlying asset (currency, shares, etc.). The market is trading in futures contracts (futures). They are contracts that are binding in the future, at a predetermined date or expiration date. Futures can be settled and delivered.
G7 (The Group of Seven) -
these are the leading states with developed economies, united in one group, which is briefly called the G-7. The following states are included in the G7 alliance: Great Britain, USA, Germany, Japan, France, Canada and Italy. The heads of these countries gather to resolve recurring issues related to international economic policy.
Gann Lines -
Trendlines that are drawn at a certain angle from the lows or highs on the chart are called Gann Lines after the legendary trader of the 20th century who invented this trading system. The perfect Gann trend line is considered to be a 45-degree line, which is the perfect ratio of time and price, which are measured proportionally in the same way. When the price approaches this line, supply and demand are balanced, when it breaks upwards, we can talk about a bullish trend, when the price is below the line, it is considered a bearish one.
GTC Open Order -
is an order to sell or buy an asset in the financial market at a certain price, which the broker receives from the client, which is valid until canceled or executed.
It is a technical analysis figure that is formed in a downtrend and indicates a market reversal. The pattern consists of one long candle, formed as a result of the price rebounding from the bottom, and a short body. When forming a hammer, which is a bullish reversal pattern, it is not recommended to immediately open long positions, it is better to wait for additional data confirming a change in the direction of price movement.
Hard Currency -
a term used to refer to a currency that is easily convertible (that is, accepted almost everywhere) with a stable exchange rate. Usually these are the currencies of developed countries with strong economies. Due to its properties, hard currency is considered a good investment tool.
a term of political and economic jargon denoting a supporter of strict monetary measures in the economy (including raising interest rates) and a hard pragmatic line in relations with other states in politics, when at the expense of other countries the position of one's own is significantly improved. The hawk also usually favors military conflicts, if this, from his point of view, is necessary for the prosperity of the state.
Hedged Margin -
These are the funds that are needed to open and subsequently maintain transactions of this type (that is, open in different directions).
Actions aimed at limiting / reducing risks, including risks associated with price movements. Hedging is also called risk insurance. For example, when in order to insure the risk of loss on a short position on one instrument, a long position is opened on the derivative of this instrument.
in the context of the Forex market, it is a reduction in the risks of currency trading by insuring funds against adverse exchange rate fluctuations. Most often, with a sharp change in the trend in the market, this means opening two positions in the direction of a new trend against one position in the direction of a trend that has ceased to be relevant. That is, hedging one deal to sell in the event of a change in the trend in Forex occurs due to the opening of two deals to buy, etc.
Initial Public Offering, IPO -
This is the initial public offering for sale of the company's shares. As a rule, securities presented at the initial public offering are owned by companies that want to attract the attention of shareholders. If you invest in the shares of such companies, you should be prepared for risky situations.
the one who issues securities in order to raise money. It can be the state, local administration or a joint-stock company.
Japanese Candles -
one of the several types of graphs in the trading terminal, allowing the trader to navigate the price fluctuations in the market. Japanese candles, thanks to their visual clarity, have become one of the most popular methods of technical analysis since the 1980s. The shape really resembles a wax candle. The rectangle denoting the period separating the opening and closing prices is considered the body of the candle. The sticks that indicate the minimum and maximum prices for a specific time interval are the shadows of the candle. Japanese candles are the basis for constructing many graphical models of technical analysis.
Limit order -
it is an order that is executed on the exchange at the price indicated in it or at a more favorable price. When you enter a limit order, it specifies a specific buy or sell price.
Limit order -
it is a trader's order that sets a maximum buy price or a minimum sell price for a stock. Limit NX -is a market limit order, an order entered for buying or selling only on Marketable Limit Order. Ot is a Limit order, the condition of which is within the best prices existing in the market at the time of its sending.
is setting the maximum size of the opened position for a separate asset or security.
Liquid market -
is a market in which a sufficiently large number of transactions are made per day, so that most orders are filled without a strong deviation from the current price. In other words, a liquid market makes it relatively easy for a trader to open and close transactions.
implies the ability to exchange shares for cash relatively quickly and without loss and vice versa. To quantify liquidity, the trading volume for a particular stock and the spread of this stock are used. The higher the turnover and the lower the spread, the higher the liquidity of the stock. Liquidity is the ability to easily and quickly sell assets at market value, without a significant impact on price movement. They call this way the ability of an asset (goods or services) to be quickly sold at a price close to the market. It is not surprising that money itself is the most liquid commodity, which is why the Forex market is so popular, because there is always both demand and supply for the currencies of different countries. The flow of liquidity is determined by the trading volume. The larger the volume, the higher the liquidity.
Locked Positions -
are the positions of the same volume opened on the same account for the same instrument in different directions (buy and sell). For example, a trader opens a transaction to sell EURUSD with a volume of 1 lot. After some time, the price starts to go against the trader's expectations, and the trader decides to open the opposite transaction - a "buy" position - with the same volume and for the same trading instrument. As a result, losses on the first open position are fixed.
London Interbank Offered Rate, LIBOR -
It is the average interbank rate of loan offers from banks providing funds in various currencies on the London interbank market. Loan terms vary from days to years.
A “long” position that begins by buying a stock. A long ("bullish") position is used to make money on an upward price movement. It is opened for purchase.
is a negative result of a trading operation or transaction, which, depending on the scenario, is expressed in a decrease in the amount of funds invested in a financial instrument, an excess of profit by losses, or a complete loss of deposit funds. Usually, in the context of trading in financial markets, the term “loss” is applied to any losing transaction or operation.
is the volume, value of a transaction or offer in shares, an abstract name used to designate in the trading platform the amount of the base currency or securities involved in the transaction.
Low price -
is the smallest amount assigned for a certain product for a specified period of time. It depends on fundamental factors, for example, the ratio of supply and demand. On the stock exchange, the minimum price is understood as the lowest price of a security according to trading results for one trading period.
is a mandatory minimum of funds on the trader's account. Volume is set by the National Association of Securities and Exchange Dealers. Maintenance is also understood as placing a sufficient volume of orders for the purchase of certain securities, which would allow maintaining the price of this instrument.
These are currency pairs containing the dollar and other popular (liquid) currency units (euro, yen, etc.).
Majority shareholders -
These are major shareholders, who, as a rule, are members of the Board of Directors of the company. They or their proxies can participate in the management of the company, they have access to all internal information about the company, their voice is significant in making decisions by the Board of Directors and the meeting of shareholders.
Making an investment decision -
implies making a decision to carry out an operation to buy or sell securities.
Managed Float -
foreign exchange interventions of the state in the market, the purpose of which are changes in exchange rates in a predetermined direction. Also called a "dirty" floating rate.
These are funds reserved by the dealer as collateral to maintain open positions. At Hamilton, all trading instruments are divided into margin groups. Accordingly, the size of the margin is determined by belonging to a particular margin group and the volume of the open position, as well as the type of account. The belonging of a trading instrument to a margin group can be found in the contract specification.
Margin Account -
is any trading account with the ability to use leverage in trading, which a client can open with a broker company.
Margin call -
is a situation when the broker sends a notification to the client that additional funds must be deposited to the account in order to maintain open positions, otherwise the transaction (or transactions) will be closed by Stop Out. This was relevant for those times when transactions were mainly made by phone. Today, Margin call means the forced closing of a deal by a broker when a certain drawdown is reached on it. Such a shift in concepts occurred due to the fact that currency quotes change too quickly, so the broker does not have the opportunity to send a notification to the client about the approaching Margin Call, and the client cannot top up the account so quickly.
Margin lending -
is the ability to buy securities in excess of equity, as well as the ability to sell securities that are not in your account. This is possible thanks to the lending provided by the broker.
Margin level -
this is the ratio of the trader's funds and collateral, which is expressed as a percentage. The margin level shows the current risks, allowing them to be prevented. Paying attention to the margin level indicator, the trader understands whether he has enough funds to open new transactions or maintain already open orders. The margin level can be found using the following formula: Margin Level = (Equity / Necessary Margin) x 100%.
Marginal Trading -
the use of leverage to carry out transactions, thanks to which clients get the opportunity to make trading operations with amounts that significantly exceed the amount of funds on the trading account.
a single system with established rules for trading in financial assets or instruments, goods or services.
Market maker -
These are participants of transactions operating in the over-the-counter market that directly determine the liquidity of this market and support it. They act as both sellers and buyers. A market maker is, for example, a market "creator", one of the participants in the NASDAQ electronic market, whose responsibilities include maintaining trading and quoting for stocks traded on the NASDAQ. Also, these are major market players (national banks, financial and investment companies), which have a serious, and in some cases decisive influence on exchange rates.
Market order -
market order, an instruction to trade a stock at whatever price prevails at the time it is received.
This is a very popular trading system based on increasing positions after losing trades and adjusting positions down after profitable trades. The strategy is based on a well-known psychological fallacy, according to which the probability of winning after losing increases. Martingale can be classified as a highly risky trading system, however, with the correct use of this strategy, a trader can make a profit even with a high percentage of losing transactions. There are two types of Martingale: simplified (when the trading position doubles after each loss) and complicated, which requires more skill and endurance from the trader, as it involves considering their transactions as one series, which can be considered completed when the income exceeds the losses.
Minority shareholders -
these are smaller shareholders, they are not members of the Board of Directors of the company, and the decision-making of the meeting of shareholders practically does not depend on their vote. Minority shareholders invest in shares in the hope for their market value increase and obtaining dividends.
Moving Average -
a method of smoothing price values that makes it easier to recognize trends. A simple moving average is the average price over the last period of a specified number of days. Represented by a line on the price chart. In some simple trend-following trading systems, the intersections of a price curve and a moving average or two moving averages (that is, one curve crosses the other from the bottom up or vice versa) are used as buy and sell signals.
National Association of Securities Dealers Automated Quotations, NASDAQ -
is an automated system that provides up-to-date quotes for trading in securities (first of all, we are talking about shares of high-tech companies). NASDAQ was formed in 1971 and today is one of the most influential stock exchanges in the world, whose bulletins are referenced by leading financial publications.
Necessary Margin -
is the amount of money a trader needs to open a position of the required volume. It is a kind of collateral that a trader must place on the account of a broker or dealing center. The size of the required margin depends on the leverage determined by the trader himself. The lower the specified leverage, the higher the required margin, and, accordingly, vice versa.
Net Change -
the difference between the closing price of the previous trading period and the closing price of the current trading period for a given security. For stock prices, the net change is usually on a daily time frame, so the net change can be positive or negative for that day in question. While the net change for stocks and most securities is quoted in US dollars when reported by the financial media, the net change can be calculated and quoted in any denomination depending on what is being traded.
New York Stock Exchange, NYSE -
Founded in the late 18th century (in 1792), the New York Stock Exchange is the oldest US stock exchange. Before its appearance, the brokers of the city mainly made their transactions in cafes (a similar practice was in effect in Europe). Today, the New York Stock Exchange is not only the most important exchange in the country with the largest economy, but also the largest in the world.
NFA (National Futures Association) -
it is a self-regulatory industry financial inspectorate, which is one of the key organizations in the US futures market. It protects investors and oversees the futures industry to prevent fraud in this area. The National Futures Association maintains a high level of transparency for every investor. The organization is independent, exists at the expense of membership dues and trading fees.
Nontrading Operations -
these are any actions related to money transfers: topping up trading and personal accounts and withdrawal of funds, operations on loans. To conduct non-trading operations, brokers, as a rule, have special regulatory documents that determine the conditions for working with depositing and withdrawing funds.
NSCC (National Securities Clearing Corporation) -
was established in 1977 as a result of the merger of divisions of the New York and American Stock Exchanges, as well as the National Association of Securities Dealers. Through it, brokerage houses, exchanges and other clearing organizations carry out mutual settlements. This National Clearing Corporation, along with the Depository Trust Company, is the largest company in the world providing settlement services for the financial market.
Odd lot -
is the volume, size of the transaction or offer which is not a multiple of 100 shares. See also Round lot.
literally means “not on the shore”, however, in fact, it does not reflect the peculiarities of geography, but the specifics of taxation. Offshore zones are territories or states that accumulate foreign capital through special tax incentives for companies that are registered in these countries.
it is the closing of a position opened to buy or sell an instrument by creating an equivalent position in the opposite direction. For example, if a trader has a short position on EURUSD, then the offset position for it will be a long trade of the same volume on this instrument.
Omnibus Account -
is an account of an intermediary company in carrying out futures operations on the stock exchange, on which transactions of one or several clients are aggregated. A joint account is opened by an intermediary company in another company and allows exchange transactions on behalf of the company that opened the account.
Open Outcry -
is a mechanism for trading shares on the NYSE and AMEX, in which sellers and buyers agree on transactions in words.
is a contract entered into by two investors, under which one of the participants in the transaction acquires or sells the underlying asset within a specified time at a price determined in advance. Another investor buys or sells the subject of the contract on the specified terms. In other words, an option can be a contract for both the purchase and sale of a trading instrument.
is an order to perform a certain action in the exchange (opening or closing a transaction). In the foreign exchange market, Forex means a request from a client or a company that acts on his behalf to complete a trading operation in the platform. There are two types of orders: market (instruction to open / close a transaction, which is given at the current moment at the current price) and pending (request to open / close a transaction when the price reaches a certain level).
Organization of Petroleum Exporting Countries OPEC -
which is also called a cartel, was formed in 1960 to regulate pricing policy and offers on the world 'black gold' market. Initially, the organization included 7 companies involved in the processing of crude oil and the resale of its derivatives. Today, the list of OPEC member states has expanded to 12 countries that own almost 80% of the world's reserves of raw materials and today provide about 40% of all oil production, which makes them practically monopolists in this market. However, disagreements between the members of this international intergovernmental organization do not always allow them to act in a coordinated manner.
Out-of-the-money Option -
This means that the option has no intrinsic value at the time of the trade. For example, you predicted that the price of an asset would rise, but, on the contrary, it fell. Your forecast was not justified, the option turned out to be unprofitable. Do not forget an important point: while the option is valid, it is possible to switch from out-of-the-money option to in-the-money.
is a state of a stock after its price has risen rapidly to levels too high to hold. Indicates that a fall may soon follow.
means that this is a transaction for one business day or, in the case of transactions that are concluded on Friday, for a period from Friday to Monday inclusive. That is, in fact, the transition of the position to the next business day "overnight". In banking, "overnight" can also mean an overnight loan given by one bank to another.
is a state of a stock after it has sold quickly to prices too low to hold. Indicates that an increase may follow soon.
denotes a form of organization and conduct of business, a joint venture, which is owned by several individuals or legal entities. However, partnership does not mean complete equality between all parties involved, someone's share or participation may be more or less.
is a set of conditions that indicates a certain state of the market and causes the trader to take any action. Visually, the models are easily identified on the charts and have appropriate names (for example, a triangle, a double bottom, a wedge, etc.). After the formation of the figure, the trader receives a signal to open or close a deal, adjust the order. There are two types of chart patterns: continuations (which indicate an intermediate trend correction) and reversals (which indicate the formation of a break in the current trend). All models are periodically repeated on the charts, as the market is cyclical. Patterns are one of the main market analysis tools for a trader, as they are universal for different Forex financial markets and time intervals.
Pending Order -
is an order to make a deal at the moment when the price reaches a given level. This is an application that a trader leaves a broker, it signals at what price level it is necessary to open or close a position. Experienced traders do not recommend trading in the foreign exchange markets without using pending orders, since they are the ones that allow you to avoid big losses.
Physical Currency Market -
a market in which, unlike Forex, as a result of a transaction, the buyer and seller necessarily transfer cash to each other. The exchange rate is agreed in advance. The transaction is usually completed within two days. The operations involve commercial and investment banks, corporations, and insurance companies. The cash market may also be referred to as the spot market.
a participant who often hesitates, not knowing what to do: buy or sell? Often makes "emotional decisions" based on fear, greed or excitement. Because of this, he often loses capital, i.e. "goes under the knife."
a special platform or part of the hall in the operating room of the exchange, as a rule, located below the main floor level. Within the exchange, the pit is the only place where traders are allowed to trade. Usually the pit is surrounded by booths that house brokers with communications equipment.
is the minimum change in the value of a financial instrument. A pip is also called the penultimate (in some cases, the last) sign in the quote of a currency pair.
is a structure of open positions on securities and cash on the account. It also means the union or collection of several securities that have certain proportions in relation to each other.
Portfolio investor -
is a legal or natural person who invests money in shares for an extended period of time, usually from one to four years, with the aim of making a profit by increasing the market value of shares and receiving dividends.
is a certain amount of securities, assets or property owned (or sold short) by any person or entity. If a trader or investor opens a buy position through a corresponding order, then this indicates their "bullish" position; otherwise (selling) it is customary to speak of a "bearish" position. The opening of any new position is eventually followed by an exit or closing of the position at some point in the future.
is a period of trading activity before the regular trading session. Usually runs from 8:00 am to 9:30 pm EST every trading day. Many investors and traders watch pre-market activity to gauge the strength and direction of the market in anticipation of the next trading session.
has several meanings: 1. The amount of payments on the bond exceeding the face value. 2. The value of the transaction paid to the seller to buy or sell an option on a futures contract.
Price-to-earnings ratio, P/E ratio -
a ratio for valuing a company that measures a stock's current price relative to its earnings per share (see Earnings per share, EPS). The price-earnings ratio is also sometimes referred to as the price multiple or profit multiple. It is calculated by the formula of the share price divided by the company's annual income.
Prime Rate -
is a discount rate, the interest on borrowed money that lenders charge their most reliable customers. The Prime Rate is typically 3% higher than the Federal Funds Rate. This interest is the price for the risk of non-payment of the debt by the client. The prime interest rate, or prime lending rate, is largely determined by the federal funds rate, which is the overnight rate that banks use to lend to each other.
Professional market participants -
are organizations that ensure the functioning of the securities market. These include: trade organizers (stock exchanges and OTC platforms); organizations that ensure the movement and fixation of property rights (depositories and registrars); organizations engaged in trading operations (brokerage firms, investment and management companies, banks, etc.); organizations accounting for mutual obligations (clearing companies).
Profitable option -
is a term used in binary options trading. A profitable option is a contract, the price of an asset within which, at the time of expiration, in a direction favorable to the trader, differs from the price of the asset at the time of buying the option.
Put option -
There are two types of options: put and call. A put option allows the buyer to sell a predetermined amount of the underlying asset (for example, shares of a company) at a specified price within a predetermined period of time. That is, the concluded contract includes 4 invariable conditions on which the transaction must take place if the seller wants to purchase the option.
Quote’s feed -
for each instrument, the current quotes are sequentially received in the trading terminal. This is called quote flow. The quote stream helps a trader to always stay up to date with the latest information on the selected instrument and make the best decisions.
is a rapid and often short-lived growth in stock prices. A bull rally occurs when investors start buying any stock in large quantities, which represents an increase in demand and price for the asset being bought. A rally may follow a long decline, indicating that the asset is oversold. On the other hand, it could be a bearish rally, that is, a brief recovery between two downturns.
Range option -
is one of the types of binary options offered for trading by brokers. If a trader invests in a Range option, he indicates a specific range in which, in his opinion, the price of the asset will be at the time of expiration of the purchased option. In te case of a correct forecast, income can reach 100% of the initial investment.
is the price of a transaction made on the stock exchange with specific shares at a specific point in time. It is also called the market price of a share. The market value of a share can change every minute, every day, every month and year. It can have several meanings depending on the type of asset: 1. If we are talking about a currency pair, then the rate is understood as the cost of a unit of the base currency of the pair calculated in the quote currency. 2. In the case of a contract for difference, the exchange rate is the value of a unit of the underlying asset of the contract in monetary terms.
is a price movement in the direction opposite to the prevailing trend. A reaction in financial markets is a sudden, but usually short-lived, up or down price move. Technical analysts often describe a downward movement in an asset's price after a period of upward movement as a reaction. A reaction is usually the market's response to news or data related to the company that issued the stock or the industry in which it operates.
The term "recession" (from the Latin recessus or retreat) is usually used in an economic context and means the beginning of a period of recession or crisis in the economy, or the transition from a period of peak business activity to a gradual decline. A recession can have different causes in each case: both expected and unpredictable.
Reference Rate -
it is the base interest rate, which is determined by the parties in order to set a benchmark for the interest rate on financial transactions. In Forex, the term reference rate refers to the interest rate, which is the basis for determining the value of securities and interest rate swaps.
Regulating organisations -
are state structures that provide control and management over the activities of issuers, investors and professional participants. In Russia, such an organization is the Federal Service for Financial Markets (FFMS). Prior to it, these functions were performed by the Federal Securities Commission (FCSM).
an asset sale agreement that includes an obligation to repurchase them at a predetermined price.
Reserve currency -
Previously, such a monetary unit was considered a reserve currency, which, in accordance with the obligations of the country that issued it, could at any time be exchanged for gold. Therefore, other states considered such a currency as a reliable investment asset and bought it. At various times, the pound sterling and the US dollar have been very popular as reserve currencies. A reserve currency today is a currency with a stable exchange rate (without strong fluctuations), which is freely convertible into the currencies of other countries and is supported by the ability of the issuing state to pay its obligations.
a situation on the market when the price of an asset reaches a maximum and then has an obstacle for a subsequent upward movement. This is the "glass ceiling" against which the price moving up, unable to overcome this level, rests. After reaching the support level, the price rushes down again. The reason for this price behavior is the reluctance of market participants to buy above the reached price and the desire of many to sell at a high price.
Resistance level -
on the price chart there is a conditional line connecting local highs, presumably the price cannot cross this line higher.
price movement in the opposite direction of the previous trend. For example, a 50% retracement in an uptrend means a 50% drop in prices from the previous uptrend.
surname of the founder of the news agency of the same name, Paul Julius Reiter. In 1851, he founded a telegraph office in London, specializing in the transmission of commercial news. Later, the office expanded its activities and turned into the Reuters agency, which today is the largest in the world. Reuters shares are listed on the London Stock Exchange and included in the FTSE 100 Index.
is a Japanese candle used in the technical analysis of the Forex market. This model is characterized by a small body or its almost complete absence and long shadows. It is believed that the rickshaw indicates a trend reversal in the foreign exchange market at its peak, when sellers and buyers are in indecision. In such a situation, the rickshaw usually hangs over the rest of the schedule. Refers to the type of Japanese candles called "doji".
Risk/Reward ratio -
the ratio between the estimates of potential losses and profits from the transaction. In addition to assessing the absolute value of profits and losses, one must also take into account their probabilities.
The situation when the expiration period of the contract in the financial market is extended. In the Forex currency market, a rollover is a transition from one trading day to another, the time when swaps are charged and signed off (fee for transferring positions to a new trading day). On PAMM accounts, a rollover occurs every hour, at which time statistics are collected, necessary calculations are made, orders are executed and information is updated.
Round lot or Even lot -
These refer to the standard number of securities traded on the stock exchange. In the case of stocks, a round lot is 100 shares or more, which can be evenly divided by 100. In bonds, a round lot is typically $100,000. Historically, a round lot of 100 shares was the smallest order that could be placed on an exchange. Today, so-called odd lots and fractional stocks allow you to fill orders as small as one share on some exchanges, or even as small as a fraction of a share.
is a speculator who buys and sells frequently to take advantage of small price fluctuations. This type of trading provides the market with more liquidity. Scalpers buy and sell frequently, which gives others the opportunity to quickly enter or exit the market. The term “scalper” arose from the fact that these traders are trying to quickly get, “tear off” a small amount from the transaction.
Documents confirming the property right or the fact of issuing a loan by the owner of such paper to the person who issued it. Securities include, for example, the following: bill of exchange, bond, share, option, futures, warrant, certificate.
securities, shares, bonds, financial contracts that are in free circulation and are traded on stock exchanges.
Security or financial instrument -
stock, bond, bill, futures, etc., giving their owner certain rights.
Sell off -
is a sale, rapid fall in stock price.
Server Log-file -
is a file that records all information about the requests and orders sent by the client to the dealer and the results of their processing to the nearest second. Created by the server.
this is the part of the Japanese candle, showing the distance to the body of the candle from the minimum or maximum price. The shadow is an important element of technical analysis because it can indicate that the market has reached a peak (a long shadow on top) or, conversely, a bottom (a long shadow on the bottom). Accordingly, the shadow can be bearish or bullish.
Share manager -
a legal or natural person who has been managing sets of shares for an extended period of time, usually from one to four years. Its purpose is to make a profit by selling shares at a higher price and buying them at a lower price, as well as by receiving dividends. Another goal of these managers may be to increase the number of shares in the package.
the sale by a trader of a borrowed (not owned) share in the hope of later buying it at a lower price and getting the difference. A short (“bearish”) position is used to make money on a price decrease.
Shorting top -
is a trading technique where a trader tries to sell a stock at or near its highest point.
means execution of an order at a price that differs for the worse from the price at which the order was placed on the market. This means that there was a strong jump in the quote. Slippage can happen during the release of important Forex news that has a strong impact on the market. The amount of slippage usually ranges from one to several tens of points. Slippage is formed due to the difference between the price at which it was planned to buy or sell and the strike price on the exchange. In other words, it means buying at a higher price, or selling at a cheaper price than planned.
Special Drawing Rights -
are an artificially created means for payment settlements that does not have a physical embodiment, everything is limited to making appropriate entries in bank accounts. It is used only within the IMF to increase reserves, credit operations, regulate the balance of payments and cover their deficit in countries that are members of the International Monetary Fund. The Special Drawing Rights rate is calculated every day based on the rates of the 4 base currencies.
a member of a stock exchange (such as the NYSE or AMEX) who is responsible for maintaining a “fair and orderly” market for trading in a particular stock.
Speculative investor -
a legal or natural person who invests his money in shares for a short time (from several hours to several months) in order to profit from exchange rate fluctuations in prices.
it is a relatively large price movement up or down in a short period of time. A good example of a negative surge in the financial markets is the infamous stock market crash on October 19, 1987, when the Dow Jones Industrial Average (DJIA) fell 23% in one day.
a type of Japanese candle with a small body and long shadows, indicating a non-market quote. A spike appears in conditions of a significant difference between the next quote and the previous one or a price gap. A spike can be either a sign of confrontation between sellers and buyers in the market, or simply be the result of a technical failure. Therefore, the appearance of spikes should be treated very carefully.
Transactions for the purchase and sale of any financial assets, which involve the delivery of the instrument in one banking day, are called spot trading (Spot trade). This means that the participants in a trading operation determine the price and date in advance, that is, the original points (spot) at which the transaction will be carried out.
the difference between the bid and ask prices (that is, the maximum selling price and the minimum buying price). One of the fundamental concepts in the foreign exchange market, without knowledge of which it is difficult to imagine the work of a trader. It denotes the difference between the current buying and selling prices of a financial instrument and is the main source of income for brokers who take a small part of the spread as a kind of commission for providing services. The difference between the best price (quote) to buy and the best price (quote) to sell a particular stock in the "order queue". The smaller the spread, the higher the liquidity.
In the stock market, the spread is the difference between the lowest bid and the highest bid. In commodity trading, the spread is the position an investor takes when buying two or more put or call options on the same underlying asset with different delivery dates. In fixed income securities, the spread means the difference in yield between two different securities with the same maturity or two similar securities with different maturities.
a term formed as a result of combining the concepts of "stagnation" and "inflation", and characterizing the slowdown in the main processes in the economy (decrease in demand, business activity, production, etc.) coupled with an increase in inflation. Stagflation is not a typical state for a market economy and is not so common. Usually stagflation is provoked by some external causes or crises, and not by the actions of the government of a particular country.
Stock Market -
this is a market where securities are freely traded (bought, sold, pledged, etc.).
Stop Loss -
this is an order that allows you to fix a deal when the instrument chosen by the trader reaches a certain price. Stop loss parameters can be set before or after opening a position. Stop loss allows the trader to avoid additional losses by automatically closing the position. A prerequisite is that if a stop loss order is placed, the price of the financial instrument must not be less than the current price on the market in case of a sell deal and not more than in case of a buy deal. Helps to prevent losses. It is used to limit capital losses that are unacceptable for the trader, if the price moves in the opposite direction from his expectations. It is used for loss management. Stop Loss are protective Stop orders, used to limit losses. Buy Stop is used to limit losses in Short positions, Sell Stop is the one to limit losses in Long positions. Stop loss is a protective order. The price position upon reaching which the transaction is closed automatically. The trader independently places an order to minimize losses.
Stop order -
a tradiung order, the execution condition of which is the price specified by the trader. If the specified price is reached, then the stop order becomes a market order. Most often used to limit losses in transactions.
Stop out -
this is a signal to force the position to be closed, which is given by the server if the client has insufficient funds on the account to maintain an open transaction. Each broker sets the size of the stop out individually. As a rule, a trader's unprofitable positions are closed at the current market price. If the trader went into the red on several positions, then the forced closing starts from the most unprofitable of them.
a situation where an equal number of Call and Put options are sold or bought, the conditions for which are identical.
Streaming quotes -
Working in the trading platform, the trader sees the flow of dealer quotes for each financial instrument online. These indicators of price changes are sent to the trading terminal without a request and are called streaming quotes. A trader, focusing on the information received from streaming quotes (Instant Execution), makes transactions.
Strike Price -
The price fixed in the option contract at which the buyer of the option can buy (Call) or sell (Put) shares in case of successful execution of the option.
is a market condition in which the price of a stock reaches a low and cannot move further down. The reason for this behavior of the security is the reluctance of sellers to sell below this level and the desire of buyers to buy at such a low price.
Support level -
on the price chart there is a conditional line connecting local lows, presumably the price “cannot” cross this line below.
represents the difference in interest rates on loans in the currencies involved in the transaction. It is credited (if positive) to the trading account or deducted from it (if negative) when an open trading position is rolled over overnight.
futures or options, the subject of which is the difference in interest rates (swap). Gives the right to conclude a contract for the difference in interest rates on a certain date in the future.
SWIFTб Society for Worldwide Interbank Financial Telecommunications -
a single international computer network through which instructions and messages about payments are transmitted.
a symbol used on stock exchanges to designate a share of a public company. The symbol consists of several letters (from one to three for companies that are traded on the NYSE and AMEX, and from four or more for Nasdaq companies).
a trader's jargon term for a lower shadow or wick, in other words, in a Japanese candle the distance between the high of the opening or closing price and the low price of a trading period. Long shadows indicate high trading activity, with the result that the price usually moves far from the open/close price. Short ones, on the contrary, indicate that the price has not gone far. The tail helps to determine who dominated the market at a particular moment: sellers or buyers.
Take profit -
it is a trading order that allows you to take profit when the price reaches a certain level. Such an order helps to reduce the risks for the trader. If a trader sets a take profit order for the selected trading instrument, then after the price reaches the set level, the transaction will be closed automatically. In an open transaction, take profit can be set at any time.
Take profit -
a trading order that automatically fixes the profit from the transaction when the price position determined by the trader is reached.
Technical analysis -
a method for forecasting price fluctuations based on the concept of recurring market cycles; a popular way among traders to predict the behavior of the price of an asset in the foreign exchange market. Technical analysis is based on the belief that price changes that have taken place in the past are inevitably repeated. Confirmation of previously recorded patterns in the behavior of the market is sought through the analysis of price charts, during which certain graphic figures are identified, which are interpreted as signs of a possible price movement in one direction or another. Technical analysis is a set of techniques and methods used to analyze the price dynamics of securities. The purpose of technical analysis is to determine the most likely direction of movement of the market rate of securities.
Technical analyst -
a specialist who studies and uses technical analysis.
The Morning Star -
This is a graphical model of technical analysis that indicates a trend reversal in the Forex market. Also called a bullish star because it appears at the bottom of a trading chart and symbolizes the price going up. The morning star consists of three Japanese candles: on the edges there is a candle with a long black body and a candle with a long white body, and in the middle there is a white candle with a small body. It is believed that the morning star is as strong as the body of the third candle overlaps the body of the first.
the minimum unit by which the price can change. A single quotation of a financial asset (currency, shares, etc.) sent by the information system. In other words, in the trading platform, a tick is any single change or movement of a quote in one direction or another. It may change by one point or more.
the minimum change in the share price displayed on the graph of the trading platform.
A unique number defined in the trading platform for each operation, which allows you to identify any pending order or open trading position. The ticker value (order number) for each completed transaction can be viewed in the transaction history.
the time interval during which the formation of one bar (one candle) is allowed.
Touch option -
is a type of binary option offered by brokers for trading. By choosing the Touch option, the trader specifies the level that the price, in his opinion, will touch in the event of an increase or decrease. If the forecast is justified, then after the expiration the trader makes a profit.
Trade session -
the period during which trading platforms operate on the territory of various geographical zones. The main ones are the American, European and Asian trading sessions. The period during which trading takes place on the exchanges. For example, on the MICEX the trading session starts at 10:00 and ends at 18:45.
a specialist who trades in securities either for the benefit of clients or for his own benefit. Decisions on the purchase and sale of securities are made by the trader independently, using his trading strategy and tactics for this. This is the one who trades in the foreign exchange market or on the stock exchange. The trader performs his trading operations with his own funds (taking into account the available leverage) or with the funds of investors that were transferred to him for management. A trader earns on price changes of the instruments he trades. The trader analyzes the situation in the financial markets and, based on the analytical data obtained, conducts transactions.
trading of securities for the purpose of making a profit from the exchange rate difference between the purchase price and the sale price, or vice versa. Trading refers to trading both up (long trades) and down (short trades). Trading includes various trading approaches, techniques and toolkit.
Trading hours -
most often, this phrase refers to the working hours of world market trading centers, such as London, New York, Hong Kong, etc. The trading hours of exchanges located in different parts of the world are different. In the context of the Forex currency market, trading hours mean the time when transactions can be made, which is around the clock on weekdays.
Trading idea -
an approach that is formed on the basis of repeating patterns of the same type in the price movement.
Trading period -
is the period between opening and closing a position, usually counted in days.
Trading system or system trading -
trading, in which the opening and closing of positions occurs according to certain trading rules. Rules can be based on different types of analysis, ideas or approaches.
Trading Terminal -
computer application used for stock trading.
Trailing Stop-Loss -
is used to protect capital from indirect losses associated with the "evaporation" of profits; in other words, the trailing stop allows the profit to run and limits it to "evaporate" at a certain level. Used for profit management.
any transaction with a financial asset (currency pairs, shares, etc.) as part of the work on the financial or foreign exchange market. For example, buying or selling shares. The act of buying or selling securities on an exchange at a specific time at a specific price. Or, in other words, the implementation of an investment decision on the purchase / sale of securities on the stock exchange.
Transaction price -
the price at which a security was bought or sold on the stock exchange at a specific point in time. It can also be called the market price of a share.
direction of price movement within a certain time interval (steady trend). Price movement that has a directional character. The trend can be up and down. This is a certain direction of price movement in Forex. The behavior of the trend, among other things, is analyzed during the technical analysis. Trends are of the following types: descending (also called bearish), ascending (also called bullish) and sideways (absent or flat). As a rule, during a downtrend, it is recommended to open positions for sale, and for an uptrend - for purchase. In the absence of a trend, it is better not to perform any operations.
is a line drawn through either successive price peaks (highs) or bottoms (lows) of a stock chart in order to determine the general direction of price movement.
Unemployment Rate -
one of the macroeconomic indicators, showing the percentage ratio of the number of people who do not have a job to the total number of the working population.
Unprofitable option -
is a term used in binary options trading. An unprofitable option is a contract in which the price of an asset at the time of expiration in a direction unfavorable for the trader differs from the price of the asset at the time of buying the option.
is the total number of sold/purchased shares for a certain period.
Мarket on Close, MOC -
is an additional condition for a Market order under which the trader is guaranteed the price of the last transaction.